Consider a 20-year, $180,000 mortgage with a rate of 6.3 percent. Four years into the mortgage, rates have fallen to 5 percent.Suppose the transaction cost of obtaining a new mortgage is $1,900.a. Should the homeowner refinance at the lower rate?YesNob. Quantify the effect of the homeowner's decision.Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Answer is complete but not entirely correct.Monthly savingsS 92.33

Answered: Image /qna-images/answer/56470ca3-1c53-4c59-a35b-7b8ec5e031c5.jpg

hould the homeowner refinance at the lower rate? Yes No quantify the effect of the homeowner's decision. ote: Do not round intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. Monthly savings s 92.33

hould the homeowner refinance at the lower rate? Yes No quantify the effect of the homeowner's decision. ote: Do not round intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. Monthly savings s 92.33

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Consider a 20-year, $180,000 mortgage with a rate of 6.3 percent. Four years into the mortgage, rates have fallen to 5 percent.
Suppose the transaction cost of obtaining a new mortgage is $1,900.
a. Should the homeowner refinance at the lower rate?
Yes
No
b. Quantify the effect of the homeowner's decision.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Answer is complete but not entirely correct.
Monthly savings
S 92.33

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